U.S. consumer prices fell in October for the first time in four months as Americans paid less for new cars and gasoline, although prices outside of food and energy posted a slight increase, the Labor Department said on Wednesday.
VASSILI SEREBRIAKOV, SENIOR CURRENCY STRATEGIST, WELLS FARGO, NEW YORK
The headline is a little softer than expected and just a negative reading month over month will probably catch some attention. Core was basically in line with expectations, maybe a little higher than expected. Bottomline, we have above-target core inflation caused by commodity price pressures, which have been easing somewhat. Net-net, I don't think there's much upside inflation risks. But given that the markets remain exclusively focused on European developments, I don't think this number will impact currencies significantly.
ROBERT BRUSCA, CHIEF ECONOMIST, FACT AND OPINION ECONOMICS, NEW YORK
I looks pretty good across the board. The headline and core numbers show deceleration across all categories.
One interesting thing is in the services sector which suggests some growth and some pricing power there.
FRED DICKSON, CHIEF MARKET STRATEGIST, D.A. DAVIDSON & CO. LAKE OSWEGO, OREGON
Kind of surprised with the down tick on the headline number. Looks like things have cooled off a little bit. That is probably a plus for the bond market and, a little bit of good economic news for the overall stock market and should offset some of the concern coming out of Europe. Generally good PPI report, good CPI report. We are not walking away saying inflation is dead. It's just we've had a little breather.
JACOB OUBINA, SENIOR US ECONOMIST, RBC CAPITAL MARKETS
From my perspective it's a pretty anticlimactic report, basically on the screws to what the market was anticipating. The Fed remains intently focused on employment and growth and not on inflation so this number is going to remain for a while in the second tier of economic data.
OMER ESINER, SENIOR MARKET STRATEGIST, COMMONWEALTH FOREIGN EXCHANGE, WASHINGTON
We're seeing a similar reaction in CPI as we saw in PPI yesterday -- down on headline due to falling gas prices and core CPI still benign. For the most part, it's a nonevent. The data is relatively upbeat in the U.S., which contrasts with the situation in Europe. Obviously the debt crisis is front and center but the data here is improving, which should provide a bit more tail wind for the dollar.
DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS
Before rounding CPI fell by 0.085%, while the core rose by 0.136%, meaning that the downside surprise was modest overall and fully due to food and energy. The second straight 0.1% on the core does mark a slowing of the trend seen previously in 2011, with autos and lodging away from home the main negatives. Trend in core CPI however is still probably close to 0.2%. Yr/yr CPI slipped to 3.5% from 3.9%, its first slowing since November 2010, but the yr/yr core CPI picked up to 2.1% from 2.0%, renewing an uptrend after a stable September.
With the main negatives in the core CPI being either corrective (autos) or erratic (lodging) it appears the underlying trend in core CPI is still near 0.2% per month, which is what the outcome would have been without the declines in those two components.
MARKET REACTION: STOCKS: U.S. stock index futures hold steady at lower levels
BONDS: U.S. Treasury debt prices steady at higher levels. Breakeven rates on Treasury Inflation Protected Securities hold steady at lower levels. FOREX: The dollar extends gains versus euro.